We are grateful to Jonathan Eaton, Caroline Freund, Bernard Hoekman, James Harrigan, Susumu Imai, Hajime Katayama, and participants at a seminar at Syracuse, at the World Bank, and at the joint NYU/NewYork Fed seminar for comments on earlier drafts. We thank the World Bank for providing research funding. Krishna thanks Princeton University for support as an International Economics Section Research Fellow for 2006-2007. The views expressed here are those of the authors and do not necessarily reflect those of the institutions to which they are affiliated.